European Union nations may seek an initial deal next month to adjust a draft carbon-market fix by delaying sales of emission permits over three years starting in 2014, according to two people familiar with the matter.
Representatives of the 28 EU member states are likely to opt for keeping the volume of permits to be withheld at auctions at 900 million, said the people, who asked not to be identified. That’s unchanged from last year’s draft of the rescue plan. The European Commission, the EU’s regulatory arm, originally proposed delaying sales of emission allowances in 2013-2015 to alleviate a record glut.
EU emission allowances rose as much as 4.1 percent today, the biggest gain in 11 days. The emergency fix for Europe’s 53-billion-euro ($72 billion) greenhouse-gas market is intended to help carbon prices rebound after they lost more than 70 percent over the past four years.
The program is known as backloading and kept member states divided until earlier this month. It still needs to be enabled by a legislative change being currently considered by EU governments and the European Parliament.
The U.K. confirmed that climate officials from national governments are preparing to discuss backloading at the Dec. 11 gathering of the EU Climate Change Committee. Under the European law, the panel is to decide about the details of the market rescue plan in an amendment to the EU carbon-permit auctioning regulation.
“The U.K. government supports backloading 900 million allowances and is currently forming a position on the more detailed questions, which we expect Member States to discuss at the next meeting of the Climate Change Committee,” the Department of Energy and Climate Change said in a statement in response to questions.
The structure of backloading may be identical to last year’s proposal, under which the EU would delay 400 million permits in the first year of the rescue plan, 300 million in the second and 200 million in the third, according to the people familiar with the matter. The withheld permits would return to the market in 2019-2020, according to the draft presented by the commission last year.
The meeting of the Climate Change Committee is set to take place after the final vote by the European Parliament on an amendment to the EU emissions trading law that would enable backloading. The draft legislative change clarifies the right of the commission to delay auctions of carbon permits and caps backloading at 900 million permits. The EU assembly’s vote is tentatively scheduled for Dec. 10.
“I am sure there will be majority in favor,” Matthias Groote, head of the Parliament’s environment panel and lead lawmaker on the draft emission-trading legislation, said in an interview in Warsaw yesterday. “Backloading should start as soon as possible to show that we care about the carbon market.”
The clarifying amendment, which already received initial approval by the Parliament on July 3 and by national governments on Nov. 8, also needs final consent from EU ministers to become binding. The bloc’s environment ministers could decide on it at their next quarterly meeting on Dec. 13 after ambassadors from national governments rubber-stamp it tomorrow, the people familiar with the matter said.
Approval by ministers for the legislative change would pave the way for a formal decision by the Climate Change Committee on the details of backloading, according to the EU law. Once adopted by the panel, the measure setting out the volume and timing of carbon-permit auction delays would become subject to scrutiny by the Parliament and national governments.
EU carbon permits for December rose to as high as 4.53 euros a metric ton on the ICE Futures Europe exchange and traded 2.3 percent up at 4.45 euros as of 3:32 p.m. in London.
“This timeline is about a month faster than expected, bringing forward the likely start date of backloading from June to May 2014,” said Itamar Orlandi, analyst at Bloomberg New Energy Finance in London.
To contact the reporter on this story: Ewa Krukowska in Warsaw at email@example.com
To contact the editor responsible for this story: Lars Paulsson at firstname.lastname@example.org